Chinese PM confident of economic growth despite downturn

Beijing: Playing down concerns over sharp decline in Chinese economy in the face of big drop in exports, Premier Wen Jiabao said China is capable of meeting its economic and social development goals for the year despite domestic and external challenges.

Early this March, Wen had already lowered China's GDP target this year to 7.5 percent this year due to economic down turn in EU and US.

Chinese economy grew by 9.2 percent year-on-year last year.

"We have the conditions and capabilities, and will be sure to fulfil this year's economic and social development targets," state-run news agency Xinhua quoted him as saying during an inspection tour of eastern Zhejiang province.

Wen who will be retiring this year after a 10-year stint in power said his optimism is based on positive changes emerging in some sectors, and favourable conditions to maintain steady and relatively fast growth.

Dragged down by a lacklustre external market and government efforts to cool inflation, the country's GDP growth hit a three-year low of 7.6 percent in the second quarter of 2012.

Wen said economy's fundamentals remain sound but warned that the foundation for economic stabilisation is still unstable, and that economic hardships may continue for some time.

Government leaders, enterprises and the whole society should have confidence, especially in times of difficulty, Wen said, calling for government authorities to carry out work in line with new conditions and local realities.

During meetings with local entrepreneurs, Wen said the economy has shown positive changes over recent months, especially since July, as both investment and consumption have grown steadily.

Wen also cited a stable job market, which saw 8.12 million new urban jobs created in the first seven months, up 390,000 from the same period of last year, and easing price gains, which provides more room for monetary loosening.

Growth of the consumer price index, a key gauge of inflation, dropped to 1.8 percent year-on-year in July, the slowest rate since February 2010.

The country's central bank earlier in the year slashed the reserve requirement ratio for banks twice and interest rates twice in a bid to boost lending and shore up growth.

PTI